"Liberation Day": That is what US President Donald Trump has called Wednesday, April 2, the day he announced huge swaths of taxes on imports worldwide. Despite the label, it was far from a day of liberation. By making imports to the US more expensive, the government is actively increasing the cost of living for American consumers.

The Trump administration has fallen for one of the most common misconceptions about trade—that it only benefits a country when it is the exporter. This could not be further from the truth. One of the greatest benefits of free trade lies with the importing country, where consumers gain access to a huge range of goods, crucially, at lower prices.

Whether it's clothes, food, medical supplies, or mobile phones, access to the global market reduces the cost of living and increases consumer choice, often alleviating poverty in the process.

It comes down to a very simple principle. No one person could produce everything he or she consumes. No family or household could do so either. No city, town, or province could produce absolutely everything they consume. Equally, no country can produce everything it consumes, nor should it. Attempts to achieve autarky are acts of economic self-harm. Freedom to exchange across borders is win-win: it allows consumers to access a plethora of goods and services, improving welfare overall.

The theory behind these economic benefits is most clearly illustrated by the economists Adam Smith, David Ricardo, and John Stuart Mill.

Adam Smith, in his 1776 Wealth of Nations, emphasized the benefits of specialization through the division of labor. Trade improves welfare by allowing people to concentrate on whatever they can do best, meaning they become even better at it, and productivity increases. He used the example of the pin factory, where each worker is able to specialize in one particular stage of the manufacturing of pins.

David Ricardo took Adam Smith's ideas even further. He showed that it is not even necessary for one particular country to have an absolute advantage to gain from free trade. Each party simply needs to focus on what they do best in comparison to the alternatives available. They have a comparative advantage.